1 00:00:00,000 --> 00:00:02,680 Speaker 1: Paid Lewis Is with US Asia Business correspondent paid good 2 00:00:02,680 --> 00:00:07,440 Speaker 1: Evening Hi Ryan. Now the US still and aluminium tariffs 3 00:00:07,440 --> 00:00:09,920 Speaker 1: come into effect, and China is going to be affected 4 00:00:09,960 --> 00:00:11,640 Speaker 1: as well. Is that how badly? 5 00:00:13,240 --> 00:00:17,520 Speaker 2: Well, it's it's important because these twenty five percent tariffs 6 00:00:18,239 --> 00:00:21,319 Speaker 2: don't have any exemptions, which is upset some countries like 7 00:00:21,680 --> 00:00:25,159 Speaker 2: Australia and Japan, which we're hoping they were going to 8 00:00:25,160 --> 00:00:28,560 Speaker 2: get exempted. But everyone has to pay them. And what's more, 9 00:00:28,640 --> 00:00:32,360 Speaker 2: it doesn't just affect raw steel and aluminium, because Trump 10 00:00:32,360 --> 00:00:36,360 Speaker 2: has expanded these metal tariffs to apply to a wide 11 00:00:36,479 --> 00:00:40,760 Speaker 2: range of products that contain aliminium and steel. So things 12 00:00:40,840 --> 00:00:46,600 Speaker 2: like tennis, rackets, exercise bikes, furniture, air conditioning units all 13 00:00:46,640 --> 00:00:49,360 Speaker 2: have tariffs on them. So that means there's about one 14 00:00:49,479 --> 00:00:54,040 Speaker 2: hundred and fifty billion dollars worth of imported consumer goods 15 00:00:54,040 --> 00:00:56,920 Speaker 2: into the US that get hit with these new tariffs 16 00:00:56,960 --> 00:01:00,680 Speaker 2: in addition to raw steel and aliminium. Now this China. 17 00:01:00,960 --> 00:01:04,640 Speaker 2: China's highly vulnerable to the risk of a global trade 18 00:01:04,680 --> 00:01:09,800 Speaker 2: war because although the US only directly takes about fifteen 19 00:01:09,880 --> 00:01:13,960 Speaker 2: percent of China's exports, a lot more goods end up 20 00:01:13,959 --> 00:01:18,800 Speaker 2: in the US being shipped via third countries like Vietnam, Mexico, 21 00:01:19,280 --> 00:01:23,280 Speaker 2: Thailand and so on. So if the US continues to 22 00:01:23,360 --> 00:01:28,200 Speaker 2: raise tariffs, this will slash quite an important driver of 23 00:01:28,319 --> 00:01:32,920 Speaker 2: growth for China. That's contributed to about a third of 24 00:01:33,000 --> 00:01:38,880 Speaker 2: China's economic expansion last year. The problem China has it 25 00:01:39,040 --> 00:01:42,360 Speaker 2: just doesn't really know what it's got to do to 26 00:01:42,480 --> 00:01:45,720 Speaker 2: please Donald Trump, because in the case of China, this 27 00:01:45,959 --> 00:01:51,000 Speaker 2: isn't just about trade deficits and moving manufacturing back to 28 00:01:51,040 --> 00:01:55,360 Speaker 2: the US, boosting US industrial production. They're being blamed for 29 00:01:55,400 --> 00:02:00,720 Speaker 2: the fentanyl crisis. The US thinks it should do more. 30 00:02:00,880 --> 00:02:04,360 Speaker 2: China says we've already done a lot in terms of 31 00:02:04,400 --> 00:02:07,600 Speaker 2: trying to deal with this, and this is really your problem. 32 00:02:08,120 --> 00:02:10,480 Speaker 2: And there were some quite strong words in fact from 33 00:02:10,520 --> 00:02:14,880 Speaker 2: the Foreign Minister Wangyi, who called Trump two faced and 34 00:02:14,919 --> 00:02:17,760 Speaker 2: said what he was doing was just not good for 35 00:02:17,840 --> 00:02:23,880 Speaker 2: bilateral relations. They haven't responded specifically yet to these tariffs. 36 00:02:24,200 --> 00:02:29,560 Speaker 2: But then interesting development yesterday was that Chinese government summoned 37 00:02:29,600 --> 00:02:34,880 Speaker 2: Walmart executives to tell them that they couldn't put pressure 38 00:02:35,240 --> 00:02:38,360 Speaker 2: on Chinese suppliers to cut their prices. This is one 39 00:02:38,400 --> 00:02:41,880 Speaker 2: of the ways in which US importers and retailers could 40 00:02:41,919 --> 00:02:44,720 Speaker 2: try and deal with Trump tariffs, or China has made 41 00:02:44,720 --> 00:02:48,320 Speaker 2: it very clear, these are your tariffs, these are US tariffs. 42 00:02:48,480 --> 00:02:51,800 Speaker 2: Don't expect to pass them on to Chinese suppliers because 43 00:02:51,800 --> 00:02:54,760 Speaker 2: they're not going to pay. So that means really, companies 44 00:02:54,840 --> 00:02:58,240 Speaker 2: like Walmarts and other importers, they only had two ways 45 00:02:58,600 --> 00:03:02,119 Speaker 2: of doing this. They're either all the tariffs themselves, which 46 00:03:02,160 --> 00:03:05,920 Speaker 2: is going to cut substantially into their profit margins, or 47 00:03:05,960 --> 00:03:08,120 Speaker 2: they passed it on to US consumers, which is going 48 00:03:08,160 --> 00:03:11,320 Speaker 2: to be inflationary, or maybe a combination of both. But 49 00:03:11,440 --> 00:03:14,160 Speaker 2: China has made it clear, don't come to us and 50 00:03:14,240 --> 00:03:16,480 Speaker 2: expect us to bear the cost of these tariffs. 51 00:03:17,600 --> 00:03:20,400 Speaker 1: I do have some sympathy for China in this position 52 00:03:20,440 --> 00:03:23,000 Speaker 1: because it's not like Mexico, where it's clear cut what 53 00:03:23,080 --> 00:03:26,000 Speaker 1: the issue is and that's the border and it's immigration. 54 00:03:27,080 --> 00:03:31,000 Speaker 1: Here they are saying, and I listened to the press 55 00:03:31,000 --> 00:03:35,240 Speaker 1: conference from the White House this week, they said, you know, 56 00:03:35,400 --> 00:03:38,360 Speaker 1: China is getting rich off ventanyl. I mean almost like 57 00:03:38,440 --> 00:03:41,880 Speaker 1: the government was involved in the shipment of ventanyl, you know, 58 00:03:42,000 --> 00:03:43,720 Speaker 1: I mean, how do you respond to that? 59 00:03:45,160 --> 00:03:48,160 Speaker 2: Well, that's been their problem, and they say that under 60 00:03:48,160 --> 00:03:51,720 Speaker 2: the Biden administration, they made a lot of progress in 61 00:03:51,840 --> 00:03:57,600 Speaker 2: cutting the components of fentanyl that were being exported to 62 00:03:57,960 --> 00:04:02,760 Speaker 2: the US, and that was so they don't understand why 63 00:04:03,120 --> 00:04:06,000 Speaker 2: Washington is taking this approach, and if it has a problem, 64 00:04:06,360 --> 00:04:08,600 Speaker 2: why not talk to us and so that we can 65 00:04:08,640 --> 00:04:10,720 Speaker 2: try and figure it out what it is we need 66 00:04:10,800 --> 00:04:12,520 Speaker 2: to do, because at the moment we just don't know. 67 00:04:13,360 --> 00:04:18,080 Speaker 1: Now, Singapore's Deputy Prime Minister is really on the selling 68 00:04:18,120 --> 00:04:21,520 Speaker 1: path here talking about Asia being the beacon of growth opportunities. 69 00:04:22,720 --> 00:04:27,160 Speaker 2: Yeah, that's right, and in some ways is right because 70 00:04:27,800 --> 00:04:32,279 Speaker 2: one of the things about smaller nations like Singapore is 71 00:04:32,320 --> 00:04:35,320 Speaker 2: that they have to be open to global trade otherwise 72 00:04:35,920 --> 00:04:40,239 Speaker 2: they just can't grow their economy and they're very prone 73 00:04:40,279 --> 00:04:43,320 Speaker 2: to disruption from global supply chain. So you find that 74 00:04:43,360 --> 00:04:47,040 Speaker 2: a country like Singapore is virtually tariff free, same as 75 00:04:47,040 --> 00:04:50,520 Speaker 2: Hong Kong. You can export to Hong Kong without any 76 00:04:50,560 --> 00:04:55,040 Speaker 2: tariffs whatsoever, and they won't go and respond either to 77 00:04:55,440 --> 00:04:59,839 Speaker 2: US tariffs and they want to be major open economies. 78 00:05:00,000 --> 00:05:02,680 Speaker 2: And it may be in some ways, you know, that's 79 00:05:02,720 --> 00:05:06,360 Speaker 2: the right approach, and there is reasons to be optimistic 80 00:05:07,160 --> 00:05:11,320 Speaker 2: about Southeast Asia because it's going to expand from around 81 00:05:11,360 --> 00:05:14,480 Speaker 2: fifty percent of the world's GDP to about sixty percent 82 00:05:14,800 --> 00:05:18,719 Speaker 2: by twenty thirty. And you know, Southeast Asia will be 83 00:05:18,760 --> 00:05:22,600 Speaker 2: the fourth largest economy in the world within the next 84 00:05:22,600 --> 00:05:25,719 Speaker 2: few years. And we have here a lot of trade 85 00:05:25,760 --> 00:05:30,160 Speaker 2: agreements already which have been very effective in cutting or 86 00:05:30,200 --> 00:05:33,520 Speaker 2: reducing tariffs on a wide range of goods. There's the 87 00:05:33,560 --> 00:05:38,640 Speaker 2: Asian Trading Goods Agreement that's eliminated almost all tariffs on 88 00:05:38,680 --> 00:05:44,000 Speaker 2: a whole range of products. We also have regional free 89 00:05:44,040 --> 00:05:47,280 Speaker 2: trade agreements like the Six Asian Plus, which New Zealand 90 00:05:47,360 --> 00:05:50,400 Speaker 2: is part of. Is also the Reset Agreement which New 91 00:05:50,480 --> 00:05:53,360 Speaker 2: Zealand is part of as well, and they have been 92 00:05:53,480 --> 00:05:57,720 Speaker 2: very successful in reducing tariffs. So really the way for 93 00:05:58,240 --> 00:06:01,039 Speaker 2: Donald Trump to go is not to go increase tariffs, 94 00:06:01,080 --> 00:06:04,520 Speaker 2: but maybe to try and join some of these regional 95 00:06:04,960 --> 00:06:08,279 Speaker 2: agreements and reduce their own tariffs and get the benefit 96 00:06:08,320 --> 00:06:12,039 Speaker 2: of tariffs being reduced back. So Singapore is onto something here. 97 00:06:12,760 --> 00:06:15,200 Speaker 1: We are after the UK and just a few seconds paiter, 98 00:06:15,279 --> 00:06:17,919 Speaker 1: but how are the imports exports looking for China for 99 00:06:18,000 --> 00:06:19,760 Speaker 1: generary not. 100 00:06:19,760 --> 00:06:23,560 Speaker 2: Good imports fell eight point four percent year on year 101 00:06:23,600 --> 00:06:26,640 Speaker 2: in the first two months for January February, the data 102 00:06:26,680 --> 00:06:30,239 Speaker 2: gets combined because of the effects of the China Chinese 103 00:06:30,360 --> 00:06:33,880 Speaker 2: Lunar New Year holidays. Now they did grow in December, 104 00:06:33,960 --> 00:06:38,080 Speaker 2: not much, by about one percent, but nevertheless, this is 105 00:06:38,320 --> 00:06:42,239 Speaker 2: the biggest decline in exports that we've seen for quite 106 00:06:42,240 --> 00:06:46,159 Speaker 2: a while. Imports also fell quite strongly as well, so 107 00:06:46,240 --> 00:06:49,400 Speaker 2: this gives us a glimpse to how these tariffs are 108 00:06:49,400 --> 00:06:53,039 Speaker 2: starting to affect China. Chinese exporters have been trying to 109 00:06:53,040 --> 00:06:58,440 Speaker 2: get around this by front loading shipments to the US, 110 00:06:58,640 --> 00:07:01,599 Speaker 2: but it does show how vulnerab or China is to 111 00:07:01,720 --> 00:07:04,480 Speaker 2: these tariffs, and the way outs for China is to 112 00:07:04,480 --> 00:07:08,560 Speaker 2: try and boost its domestic demand, gets consumers spending more 113 00:07:08,880 --> 00:07:12,720 Speaker 2: and absorb goods into its own economy rather than trying 114 00:07:12,800 --> 00:07:14,239 Speaker 2: to export them abroad. 115 00:07:15,160 --> 00:07:16,880 Speaker 1: Nice one, Peter, Thank you for that. Peter Lewis that 116 00:07:16,960 --> 00:07:21,320 Speaker 1: Asia Business Correspondence. For more from Hither Duplessy Alan Drive, 117 00:07:21,480 --> 00:07:24,880 Speaker 1: listen live to news talks. It'd be from four pm weekdays, 118 00:07:25,000 --> 00:07:27,200 Speaker 1: or follow the podcast on iHeartRadio.